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CA Intermediate · Advanced Accounting · AS 3 Cash Flow Statement

Godavari Pharma Ltd has the following for the year: cash generated from operations Rs 9,00,000; income tax paid Rs 1,80,000; purchase of fixed assets Rs 4,00,000; sale of investments Rs 1,20,000; dividend received Rs 30,000; proceeds of long-term loan Rs 2,00,000; interest paid Rs 40,000; dividend paid Rs 70,000; repayment of debentures Rs 1,50,000. Interest and dividends are classified per AS 3 for a non-financial enterprise (interest paid and dividend paid as financing, dividend received as investing). What is the net increase in cash and cash equivalents?

The net increase is Rs 4,10,000. Operating cash flow is Rs 7,20,000 after tax, investing is a net outflow of Rs 2,50,000 including dividend received, and financing is a net outflow of Rs 60,000 after loan proceeds, interest, dividend and debenture repayment.

  1. ARs 4,10,000Correct
  2. BRs 3,70,000
  3. CRs 4,50,000
  4. DRs 2,60,000

Explanation

Operating: 9,00,000 - 1,80,000 = 7,20,000. Investing: -4,00,000 + 1,20,000 + 30,000 = -2,50,000. Financing: 2,00,000 - 40,000 - 70,000 - 1,50,000 = -60,000. Net = 7,20,000 - 2,50,000 - 60,000 = 4,10,000. Rs 3,70,000 wrongly deducts interest again.

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